S&P's negative-equity-o-meter

Ratings agency Standard & Poor's reckon that house prices will fall about 25% from their peak of last year, which would "plunge one in seven homeowners into negative equity".

According to my own nequity-o-meter (itself based on Bank of England figures), when prices have fallen by 25% from peak (i.e. in a year or two), there will be 'only' about a million households in nequity, i.e. about one in twenty.

The clue is here: S&P said that for every further percentage point decline in house prices, between 60,000 and 180,000 extra homeowners could fall into negative equity. That's a handsome margin of error, eh?

Funnily enough, a 25% fall is just about at the tipping point; if prices fall by 35% from peak, rather than 'only' 25%, the number of households in nequity would double.